If you provide 401(k) benefits for your employees, 401(k) management fees are something that you likely deal with as a matter of course. If everything has been going well, however, you may have never questioned the validity of the fees you are charged or considered how your rates stand against the national average. You may be missing out on an opportunity to reduce the fees you pay to manage your 401(k). SIB cost reduction consultants have deep experience working with 401(k) management providers, helping enterprise-level companies lower their 401(k) management fees and improve their ROI.
How SIB Can Help You Lower 401(k) Management Fees
High 401(k) management fees can reduce your investment. That could mean less money for your workforce at the end of a dedicated career, not to mention an ongoing drain on your company’s resources. Understanding what you are being charged for is the first step to take corrective measures. 401(k) management fees fall into three primary categories:
Plan Administration Fees
These involve day-to-day administrative services and operating expenses for activities such as record keeping, trustee, accounting and legal services. In an individual plan, these fees may be deducted from the actual returns, but as an employer, they will generally be borne by you. If taken as a deduction from the plan’s assets, it doesn’t fall under any legally mandated fee disclosures, so the company really has no legal impetus to let you know what they are. The key here from a cost-reduction standpoint is to ensure that you are getting exactly what you are paying for. In other words, if your “administrative fees” include access to legal or financial advice that you are not using, then you are simply paying too much. By examining your contract and level of service, SIB can uncover leverage to renegotiate a better rate for your 401(k) management.
Investment fees make up the bulk of 401(k) management fees, and are generally assessed as a percentage of the assets invested. Mutual fund management, for example, can carry the highest expense and can eat away at your investment over time. When it’s buried in the bigger prospectus, it may seem inconsequential, but it often adds up to a significant amount in the end. Again, this ultimately comes out of the investment, and there is potential here to lose a great deal of money if it’s ignored. So don’t ignore it. Through a comprehensive audit, SIB can uncover any hidden 401(k) fees and help to make sure that you’re receiving the level of service you’re paying for and that your rates are on par with national standards.
Individual Service Fees
Individual service fees are another type of management fee and can be charged for various optional features like 401(k) loans. Other individual fees include termination charges, conversion charges, startup charges, and more.
On top of these three primary fees, there is the employer’s portion of the contribution, which is largely dependent on how many employees you have in the program. These fees could range anywhere from 0.5 percent for an enterprise-level company to 1.4 percent for a small business. Generally, the larger the “share class”—in other words, the larger the total investment—the lower the fees. However, there may still be ways for you to lower your overall fees and put more money into your employee’s pockets, and yours at the end of the day. Leveraging extensive experience and a database of benchmarked rates, SIB knows just which fees can be negotiated in order to pass along savings to you and financial security to your workforce.
SIB’s Process and No-Risk Approach
SIB is America’s cost reduction specialist. With years of experience helping companies lower 401(k) management fees, we are confident that we can secure significant savings for you. If we are unable to lower your 401(k) management costs, you don’t owe us a thing. We can renegotiate your operating expenses, administrative fees, and investment advisor’s fees—and we may be able to eliminate them entirely.
We will perform our audit without disrupting your services. You won’t notice any change until you look at the bottom line.
Contact SIB to reduce your 401(k) management fees and other expenses today.